Dollar Continues Lower

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Monday was day 13 for the daily dollar cycle and we see the dollar continuing lower.

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The dollar has already broke below the previous daily low. So the dollar is in a failed daily cycle and will continue lower until it prints a daily cycle low. At 13 days, the dollar has five more days before it enters its timing band for a daily cycle low.

Quite frankly, with the dollar in a failed daily cycle, I was expecting a little more enthusiasm from the precious metals.

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Gold’s daily cycle peaked in late October. This past Wednesday it formed its lowest point since the October peak. So while gold broke the declining trend line last Wednesday, there has been no bullish follow through. A break above 1251.3 forms a swing low and signals a new daily cycle.

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Stocks printed a swing low last Wednesday. The swing low was accompanied with a clear and convincing trend line break on Friday signaling a new daily cycle. This being the fourth daily cycle of the current intermediate cycle. Our framework calls for this cycle to form as a left translated cycle peaking by day 20 before rolling over into an intermediate cycle decline.

Meanwhile bonds are at important juncture.

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Bonds formed a left translated daily cycle low in late November. The subsequent rally has been contained by the declining trend line. Bonds just backtested their recent daily low. Bonds will need to break above the declining trend line or risk printing another failed daily cycle.


5 thoughts on “Dollar Continues Lower

    • Phil,

      Barcharts does show Wednesday to be lower than Friday. Stockcharts shows it the other way. I do use both Barcharts and Stockcharts when I post a chart. But for any disceprency I usually side with Barcharts.

      • Phil,

        You bring up a good point. The EURO is on day 21 of its daily cycle.

        E6 Y00 Commodity Futures Price Chart for Euro F

        This EURO cycle should form as a right translated cycle and at 21 days we can expect a brief decline.
        Now the dollar entered day 14 and is 4 days shy of its normal timing band for a daily cycle low. But overnight we can see that the dollar is testing a former support/resistance level.

        $$$ resistance support

        The EURO will likely decline as the dollar rallies into a new daily cycle. However, that should be short lived. My best guess is that we will see the dollar break below the 80 level as it seeks out its daily cycle low. The new cycle will then back test this level before rolling over. We will have to see how it plays out.

  1. Often bonds bottom out first before stocks roll over, see 2011. So bonds should rise as a condition for stock to enter the longer cycle decline. Let’s see how it plays out from here.

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